U.S. Joins Suit Against Lockheed & Vendor for Allegedly Mischarging the Government

WASHINGTON -- The United States has intervened in a whistleblower suit alleging
millions of dollars of mischarging by Lockheed Martin Corporation; Lockheed’s
vendor, Tools & Metals Inc. (TMI); Todd Loftis, TMI’s former president and CEO;
and Linda Loehr, TMI’s former officer, director and beneficial owner, the
Justice Department announced today.

The suit was filed in U.S. District Court in Dallas by former TMI account
executive, John Becker, and a competitor to TMI, Robert Spencer, under the qui
tam or whistleblower provisions of the False Claims Act (FCA). Under those
provisions, a private party, known as a whistleblower or a relator, can file an
action on behalf of the United States and receive a portion of the recovery.
Under FCA, the United States may recover three times the amount of its losses
plus civil penalties.

On Dec. 8, 2005, Loftis pleaded guilty to one count of conspiracy to defraud
the United States with false and fraudulent claims in connection with TMI’s
mischarging. He is currently serving a seven year sentence.

The whistleblower complaint, which preceded Loftis’ plea and which the United
States has now joined, alleged that Loftis through TMI, a company that sold
perishable tools that Lockheed used in manufacturing, caused false claims to be
submitted by Lockheed to the United States, primarily the Department of Defense
from January 1998 to February 2006.

Lockheed is also alleged to be independently liable for TMI’s violation of the
FCA due to its reckless oversight of TMI. Lastly, the relators’ complaint
alleged that Loehr, the beneficial owner of TMI, recklessly failed to carry out
her responsibilities as an officer and director of TMI. The United States
declined to intervene in the relators’ bid collusion and conspiracy claims and
declined to intervene against other defendants named in the relators’ complaint.

“Today’s action is meant to ensure that in this era of multiple demands on
government funds, the U.S. can rely on the claims for payment submitted by its
defense contractors,” said Peter D. Keisler, Assistant Attorney General for the
Department’s Civil Division.

“Government contractors are expected to take necessary steps to ensure that
their claims for payment are accurate. Anything short of that is unacceptable,”
said Richard B. Roper, U.S. Attorney for the Northern District of Texas.

The investigation of the allegations in the complaint was conducted by the
U.S. Attorney’s Office for the Northern District of Texas, the Justice
Department’s Civil Division, the Defense Criminal Investigative Service, the Air
Force Office of Special investigations, and the Defense Contract Audit Agency.